Nippon Steel’s $15bn (Y2.35trn) bid to take over US Steel was officially shut down by US President Joe Biden last Friday. The decision came after a national security committee reviewing the deal failed to reach a decision and deferred the final say to the White House.
Nippon Steel and US Steel are now pursuing legal action with two lawsuits. The first is against the US government for shutting down the deal, saying that Biden “ignored the rule of law to gain favour” with trade unions resulting in “unlawful political interference” in the vetting process.
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The second lawsuit is aimed at the US Steelworkers union president David McCall and Cleveland-Cliffs CEO Lourenco Goncalves for alleged “illegal and coordinated actions aimed at preventing the transaction.”
The White House remains steadfast in its rationale for blocking the deal, saying it posed national security concerns. The companies have pushed back against this explanation, pointing out that Japan is the US’ closest ally in the region. Japan and the US are each other’s top foreign investors.
The Nippon Steel deal was caught in political headwinds during the recent presidential election in the US. It faced strong opposition from the US Steelworkers Union, which is based in the swing state of Pennsylvania. During their presidential campaigns, both Vice President Kamala Harris and President-elect Donald Trump said they opposed the deal.
Japanese Prime Minister Shigeru Ishiba said the US “need[s] to clearly explain why there are security concerns. We are allies, but in terms of our future relationship, the points I have just mentioned are extremely important.”
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By GlobalDataSenior officials in Biden’s administration, including Treasury Secretary Janet Yellen, expressed reservations over how blocking the deal could harm relations with Japan, according to officials who spoke with the Washington Post.
“Over the last decade, there has been an understanding in Tokyo that both US parties have shifted in the direction of economic nationalism, of greater protectionism. This is just the reality,” Japan Foresight founder Tobias Harris said on Bloomberg TV.
Nippon Steel had put the US at the centre of its growth strategy. In November 2024, the company’s vice-chairman, Takahiro Mori, told Reuters “There is no global strategy without the US.” The company may now pivot their focus to India, where it already has a joint venture, Arcelormittal Nippon Steel India.
While both the Japanese and US companies have faced major political pushback, Reuters reported that a major rival had also been casting doubt on the deal. The Brazilian-born CEO of steelmaker Cleveland-Cliffs, Lourenco Goncalves, assured investors in at least nine separate calls that Biden would kill the deal months before he did so, according to the outlet. Cleveland-Cliffs made a failed bid to buy US Steel in August 2023.
This story was updated to include details from the official statement by Nippon Steel and US Steel regarding their pursuit of legal action.
